Australia — PDS exclusion, s 47 awareness, and disclosure

The test in this jurisdiction

Retail life and IP policies define ‘pre-existing’ in the PDS — often awareness, symptoms a reasonable person would notice, treatment, investigation, or a chronic illness in a 12-month (sometimes longer) window. Group cover inside super frequently applies a 12-month pre-existing limitation on automatic acceptance. AFCA applies the PDS words, then tests whether the Act stops the insurer using them.

Section 47 ICA: the insurer cannot rely on a pre-existing exclusion if, before entry, the person was not aware of the condition and a reasonable person in those circumstances could not be expected to have been aware of it. AFCA’s approach is that awareness is not the diagnosis stamp and not a fleeting ache — GP notes, referrals, and scans in the pre-inception window decide it.

A different fight is duty of disclosure (older contracts) or the duty to take reasonable care not to make a misrepresentation (from 5 October 2021 for consumer contracts). Remedies live in ICA s 29: avoid, vary, or reduce. AFCA will not let a retrospective exclusion go further than a prudent insurer would have gone. Do not collapse these into one ‘they said it was pre-existing’ paragraph.

Limbs to check

1. PDS definition Does the claimed condition meet the policy’s own definition (treatment, investigation, reasonable-person symptoms, chronic illness) in the stated window?
2. s 47 awareness Even if the PDS is met, was the person actually aware, and would a reasonable person have been aware, of that condition before the contract? If both answers are no, the exclusion is blocked.
3. Causation Is the claim ‘arising from’ that condition, or from a new injury or illness after cover? Aggravation clauses are common — read them; they are not automatic.
4. Disclosure / s 29 If the insurer is really saying ‘you didn’t tell us’, that is not the exclusion. It is a separate remedy with its own onus and time limits.